Myriad Genetics Reports Financial Results for Third Quarter of Fiscal Year 2014
May 06 2014 - 4:05PM
Myriad Genetics, Inc. (Nasdaq:MYGN) today announced financial
results for the fiscal third quarter and nine months ended March
31, 2014, increased its fiscal year 2014 guidance, and provided an
update on recent business highlights. Revenue for the third quarter
was $182.9 million, a 17 percent increase over the same period in
the prior year. Third quarter GAAP earnings per diluted share were
$0.48, which included a $12.6 million one-time, non-cash expense
associated with the purchase of Crescendo Bioscience, Inc. during
the quarter and a $1.2 million non-cash amortization of acquired
intangible assets. Excluding these non-cash charges, third quarter
adjusted earnings per diluted share were $0.60, a 30 percent
increase over the same period in the prior year. A reconciliation
of GAAP to adjusted earnings per diluted share is provided in the
financial section of this earnings release.
"Myriad continued to deliver double digit top and bottom line
growth in the third quarter which reflects the continued success of
our business strategy," said Peter D. Meldrum, president and CEO of
Myriad. "More importantly, we are well positioned to grow our
business in the future, deliver long-term value for shareholders,
and achieve our goal of building the leading global molecular
diagnostic company focused on providing exceptional patient care
across all major human diseases."
Fiscal Third Quarter 2014 Results
- Molecular diagnostic testing revenue in the third quarter rose
to $176.2 million, an increase of 19 percent compared to the third
quarter of 2013. Women's Health revenue totaled $80.7 million, an
increase of 53 percent over the same period in the prior year.
Oncology revenue was $92.4 million, compared to $95.8 million in
the third quarter of 2013. This $3.4 million year-over-year decline
resulted from a $6 million decrease in the Medicare reimbursement
rate for BRACAnalysis® that took effect January 1, 2014. Effective
April 1, 2014, Medicare increased the reimbursement rate for
BRACAnalysis by 37 percent.
- Revenue from Myriad's hereditary cancer tests totaled $169.6
million, an increase of 16 percent over the same quarter in the
previous year. In this segment, BRACAnalysis revenue was $119.7
million, BART™ revenue was $21.1 million, Myriad myRisk™ Hereditary
Cancer revenue was $14.5 million, and Colaris® and Colaris AP®
revenue was $14.4 million.
- Revenue from Myriad's other molecular diagnostic tests was $3.5
million, an increase of 25 percent compared to the previous
year.
- Revenue from the recent Crescendo acquisition that closed on
February 28, 2014, was $3.1 million in the fiscal third quarter,
which represented one month of revenue.
- Companion diagnostic service revenue in the fiscal third
quarter was $6.7 million, a 17 percent decrease over the same
period in 2013. Companion diagnostic service revenue is expected to
fluctuate from quarter to quarter due to the timing of research
projects with our pharmaceutical partners.
- Operating income was $55.3 million in the third quarter;
however, excluding the non-cash charges associated with the
Crescendo acquisition, adjusted operating income was $69.1 million,
an increase of 19 percent over the same period in the prior
year.
- Net income was $36.8 million in the third quarter; however,
excluding the non-cash charges associated with the Crescendo
acquisition, adjusted net income was $46.2 million, an increase of
21 percent over the same period in the prior year.
- During the quarter, the Company repurchased 1.6 million shares
or $41.9 million of common stock under its stock repurchase
program. Fiscal third quarter diluted weighted average shares
outstanding were 76.4 million compared to 82.4 million in the same
period last year.
- The Company ended the quarter with $277.7 million in cash, cash
equivalents and marketable investment securities compared to $462.3
million at March 31, 2013. The $184.6 million decline in total cash
balances is primarily due to the repurchase of $243.6 million worth
of company stock over the last four quarters and the use of $245
million in net cash associated with the Crescendo acquisition.
Year-to-Date Performance
- Total revenue for the first three quarters of fiscal 2014 was
$589.5 million, an increase of 34 percent over the $439.1 million
reported for the first nine months of fiscal 2013.
- Operating income was $221.2 million for the first nine months
of fiscal year 2014; however, excluding the non-cash charges
associated with the Crescendo acquisition, adjusted net operating
was $235.4 million, an increase of 45 percent over the same period
in the prior year.
- Net income was $142.6 million for the first nine months of
fiscal year 2014; however, excluding the non-cash charges
associated with the Crescendo acquisition, adjusted net income was
$152.5 million, an increase of 47 percent over the same period in
the prior year.
- GAAP diluted earnings per share were $1.82 for the first nine
months of fiscal year 2014; however, excluding the non-cash charges
associated with the Crescendo acquisition, adjusted, diluted
earnings per share were $1.95, an increase of 57 percent over the
same period in the prior year.
Business Highlights
- Myriad entered into a three-year contract with United
Healthcare to provide coverage for Myriad's myRisk Hereditary
Cancer test. The contract also provides myRisk update testing for
patients who have previously received one of Myriad's single cancer
tests and want the more comprehensive assessment provided by the
25-gene myRisk test.
- Myriad submitted the first module of a premarket approval
application (PMA) to the FDA for use of its BRACAnalysis test as a
companion diagnostic for olaparib®, AstraZeneca's novel PARP
inhibitor. AstraZeneca recently announced that it has received
priority review status from the FDA for olaparib with a PDUFA date
of October 3, 2014 setting up a potential FDA approval for olaparib
in late calendar year 2014. Additionally, AstraZeneca also
announced the initiation of three Phase 3 clinical trials in breast
cancer with a planned NDA filing for metastatic breast cancer in
2016.
- Myriad completed the acquisition of Crescendo Bioscience, a
global leader in autoimmune diagnostics for $270 million.
Crescendo's Vectra DA test is the only molecular diagnostic product
on the market that assesses rheumatoid arthritis disease activity
and provides rheumatologists with critical information that can be
used to more effectively treat RA patients.
- Myriad expanded its collaboration with Tesaro incorporating the
use of Myriad's proprietary HRD test to identify tumor subtypes
that may respond to Tesaro's investigational new PARP inhibitor
niraparib. This agreement represents the fifth commercial companion
diagnostic collaboration with the Company's HRD test.
- Myriad RBM and the Institut Pasteur published a landmark study
of immune response in the journal Immunity that provided new
insights into healthy human immune system response. The study
utilized Myriad RBM's proprietary TruCulture® blood culturing and
collection system to characterize individual immune responses to
relevant medical stimuli.
- The National Cancer Comprehensive Network (NCCN) revised its
medical guidelines for hereditary colon cancer screening. The new
guidelines use risk-based criteria to identify patients who are
appropriate for testing, which should significantly increase the
eligible testing population for hereditary colon cancer.
Additionally, the Society of Gynecological Oncologists also revised
their guidelines to recommending that all ovarian and endometrial
cancer patients be tested for hereditary cancer risk.
- Myriad published a clinical utility study on Prolaris® that
demonstrated 65 percent of patients diagnosed with prostate cancer
had their treatment plans changed from their physician's original
recommendations based upon their Prolaris test results. Myriad
submitted this data as part of its dossier for Medicare
reimbursement.
Increased Fiscal Year 2014 Outlook
Myriad is raising its revenue expectations for the fiscal year
ending June 30, 2014 to $770 to $775 million, compared to previous
guidance of $740 to $750 million. This new guidance represents 26
percent revenue growth when compared to the prior fiscal year. The
non-GAAP financial guidance discussed below reflects certain
non-cash charges associated with acquisitions to assist in
analyzing and assessing our core operational performance. Please
see our Reconciliation of Non-GAAP Financial Guidance included in
this release for a reconciliation of the GAAP and non-GAAP
financial measures. We believe this will provide investors with
additional information that may be useful in analyzing the
Company's past and future operating performance. The Company is
projecting adjusted diluted earnings per share of $2.37 to $2.40
compared to previous guidance of $2.09 to $2.12. The new guidance
represents 34 to 35 percent EPS growth relative to the adjusted
diluted earnings per share of the prior fiscal year.
Conference Call and Webcast
A conference call will be held on Tuesday, May 6, 2014, at 4:30
p.m. Eastern Time to discuss Myriad's financial results for the
fiscal third quarter of 2014, increased fiscal year 2014 guidance,
and recent business highlights. The dial-in number for domestic
callers is (800) 667-8757. International callers may dial (303)
223-4377. All callers will be asked to enter the reservation number
21714202. An archived replay of the call will be available for
seven days by dialing (800) 633-8284 and entering the above
reservation number. The conference call also will be available
through a live webcast at www.myriad.com.
About Myriad Genetics
Myriad Genetics is a leading molecular diagnostic company
dedicated to making a difference in patients' lives through the
discovery and commercialization of transformative tests to assess a
person's risk of developing disease, guide treatment decisions and
assess risk of disease progression and recurrence. Myriad's
molecular diagnostic tests are based on an understanding of the
role genes play in human disease and were developed with a
commitment to improving an individual's decision making process for
monitoring and treating disease. Myriad is focused on strategic
directives to introduce new products, including companion
diagnostics, as well as expanding internationally. For more
information on how Myriad is making a difference, please visit the
Company's website: www.myriad.com.
Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris
AP, Myriad myPath, Myriad myPlan, Myriad myRisk, and Prolaris are
trademarks or registered trademarks of Myriad Genetics, Inc. or its
subsidiaries in the United States and foreign countries. MYGN-F,
MYGN-G
MYRIAD GENETICS, INC.
AND SUBSIDIARIES |
|
|
CONDENSED CONSOLIDATED
INCOME STATEMENTS (Unaudited) |
|
|
|
|
|
|
|
(in thousands, except per share amounts) |
Three Months
Ended |
Nine Months
Ended |
|
Mar. 31, 2014 |
Mar. 31, 2013 |
Mar. 31, 2014 |
Mar. 31, 2013 |
|
|
|
|
|
Molecular diagnostic testing |
$176,191 |
$148,384 |
$565,335 |
$416,304 |
Companion diagnostic services |
6,733 |
8,088 |
24,115 |
22,746 |
Total revenue |
182,924 |
156,472 |
589,450 |
439,050 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of molecular diagnostic
testing |
23,648 |
16,462 |
67,842 |
45,960 |
Cost of companion diagnostic
services |
2,961 |
3,872 |
10,379 |
11,585 |
Research and development
expense |
13,397 |
13,618 |
47,289 |
39,125 |
Selling, general, and
administrative expense |
87,631 |
64,602 |
242,752 |
180,294 |
Total costs and expenses |
127,637 |
98,554 |
368,262 |
276,964 |
|
|
|
|
|
Operating income |
55,287 |
57,918 |
221,188 |
162,086 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest income |
2,498 |
1,434 |
5,190 |
4,187 |
Other |
(442) |
(111) |
(1,066) |
(224) |
Total other income |
2,056 |
1,323 |
4,124 |
3,963 |
|
|
|
|
|
Income before income taxes |
57,343 |
59,241 |
225,312 |
166,049 |
|
|
|
|
|
Income tax provision (benefit) |
20,573 |
21,349 |
82,719 |
62,984 |
|
|
|
|
|
Net income |
$36,770 |
$37,892 |
$142,593 |
$103,065 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$0.50 |
$0.47 |
$1.87 |
$1.27 |
Diluted |
$0.48 |
$0.46 |
$1.82 |
$1.23 |
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
Basic |
73,821 |
80,375 |
76,173 |
81,219 |
Diluted |
76,374 |
82,434 |
78,332 |
83,544 |
|
|
|
|
|
Condensed Consolidated
Balance Sheets (Unaudited) |
|
|
|
Mar. 31, 2014 |
Jun. 30, 2013 |
|
|
(In thousands) |
|
|
|
|
Cash, cash equivalents, and marketable
investment securities |
$277,713 |
$531,064 |
|
|
Trade receivables, net |
82,678 |
94,333 |
|
|
Other receivables |
3,226 |
3,373 |
|
|
Prepaid expenses |
2,307 |
956 |
|
|
Inventory |
18,906 |
5,007 |
|
|
Tax receivable |
12,360 |
— |
|
|
Equipment and leasehold improvements,
net |
32,665 |
27,602 |
|
|
Note receivable |
— |
21,667 |
|
|
Other assets |
5,000 |
13,000 |
|
|
Intangibles, net |
208,296 |
13,330 |
|
|
Goodwill |
166,746 |
56,850 |
|
|
Deferred tax assets |
6,529 |
36,639 |
|
|
Total assets |
$816,426 |
$803,821 |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
$70,038 |
$62,466 |
|
|
Deferred revenue |
2,118 |
2,043 |
|
|
Uncertain tax benefits |
13,641 |
10,718 |
|
|
Deferred tax liabilities |
8,387 |
|
|
|
Stockholders' equity |
722,242 |
728,594 |
|
|
Total liabilities and
stockholders' equity |
$816,426 |
$803,821 |
|
|
Statement regarding use of non-GAAP financial
measures
In this press release, the Company's financial results and
financial guidance are provided in accordance with accounting
principles generally accepted in the United States (GAAP) and using
certain non-GAAP financial measures. The Company's financial
measures under GAAP include substantial one-time charges related to
its acquisition of Crescendo Bioscience, Inc. in February 2014 and
ongoing amortization expense related to acquired intangible assets
that will be recognized over the useful lives of the assets.
Management believes that presentation of operating results that
excludes these items provides useful supplemental information to
investors and facilitates the analysis of the Company's core
operating results and comparison of operating results across
reporting periods. Management also uses non-GAAP financial measures
to establish budgets and to manage the Company's business. A
reconciliation of the GAAP financial results to non-GAAP financial
results is included in the attached financial statements.
Following is a description of these adjustments:
- Acquisition -- change of control payments: Represents payments
to reward Crescendo employees for efforts that led to and
facilitated the completion of the Myriad acquisition. The payout
was instituted and approved by Crescendo immediately prior to the
close of the acquisition, and was paid for out of the acquisition
purchase price. Given the proximity of the change of control
payout and the closing of the merger, the change of control expense
was recorded in Myriad's post-acquisition financial results.
- Acquisition -- accelerated share-based compensation: Represents
stock-based compensation expense resulting from the accelerated
vesting of Crescendo employee options immediately prior to the
acquisition that was recorded in Myriad post-acquisition financial
results.
- Acquisition -- amortization of intangible assets: Represents
recurring amortization charges resulting from the acquisition of
intangible assets including developed technology and database
rights.
The Company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Non-GAAP results are reported
in addition to, and not as a substitute for, or superior to,
financial measures calculated in accordance with
GAAP. Reconciliations between GAAP and non-GAAP results are
presented in the tables of this release.
Reconciliation of GAAP to
Non-GAAP Financial Measures |
for the three and Nine
Months ended March 31, 2014 and 2013 |
(Unaudited data in
thousands) |
|
Three Months
Ended |
Nine Months
Ended |
|
Mar. 31, 2014 |
Mar. 31, 2013 |
Mar. 31, 2014 |
Mar. 31, 2013 |
|
|
|
|
|
GAAP Cost of molecular diagnostic
testing |
$ 23,648 |
$ 16,462 |
$ 67,842 |
$ 45,960 |
GAAP Cost of companion diagnostic
testing |
2,961 |
3,872 |
10,379 |
11,585 |
Acquisition - change of control
payments |
(238) |
-- |
(238) |
-- |
Acquisition - accelerated
share-based compensation |
(185) |
-- |
(185) |
-- |
Acquisition - amortization of
intangible assets |
-- |
-- |
-- |
-- |
Non-GAAP COGS |
$ 26,186 |
$ 20,334 |
$ 77,798 |
$ 57,545 |
|
|
|
|
|
Non-GAAP Gross Margin |
86% |
87% |
87% |
87% |
|
|
|
|
|
GAAP Research and
Development |
$ 13,397 |
$ 13,618 |
$ 47,289 |
$ 39,125 |
Acquisition - change of control
payments |
(1,710) |
-- |
(1,710) |
-- |
Acquisition - accelerated
share-based compensation |
(2,075) |
-- |
(2,075) |
-- |
Acquisition - amortization of
intangible assets |
(78) |
(78) |
(234) |
(234) |
Non-GAAP R&D |
$ 9,534 |
$ 13,540 |
$ 43,270 |
$ 38,891 |
|
|
|
|
|
GAAP Selling, General and
Administrative |
$ 87,631 |
$ 64,602 |
$ 242,752 |
$ 180,294 |
Acquisition - change of control
payments |
(3,747) |
-- |
(3,747) |
-- |
Acquisition - accelerated
share-based compensation |
(4,669) |
-- |
(4,669) |
-- |
Acquisition - amortization of
intangible assets |
(1,067) |
(116) |
(1,400) |
(349) |
Non-GAAP SG&A |
$ 78,148 |
$ 64,486 |
$ 232,936 |
$ 179,945 |
|
|
|
|
|
GAAP Operating Income |
$ 55,287 |
$ 57,918 |
$ 221,188 |
$ 162,086 |
Acquisition - change of control
payments |
5,695 |
-- |
5,695 |
-- |
Acquisition - accelerated
share-based compensation |
6,929 |
-- |
6,929 |
-- |
Acquisition - amortization of
intangible assets |
1,145 |
194 |
1,634 |
583 |
Non-GAAP Operating
Income |
$ 69,056 |
$ 58,112 |
$ 235,446 |
$ 162,669 |
|
|
|
|
|
Non-GAAP Operating
Margin |
38% |
37% |
40% |
37% |
|
|
|
|
|
GAAP Net Income |
$ 36,770 |
$ 37,892 |
$ 142,593 |
$ 103,065 |
Acquisition - change of control
payments |
5,695 |
-- |
5,695 |
-- |
Acquisition - accelerated
share-based compensation |
6,929 |
-- |
6,929 |
-- |
Acquisition - amortization of
intangible assets |
1,145 |
194 |
1,634 |
583 |
Tax benefit associated with
non-GAAP adjustments |
(4,337) |
-- |
(4,337) |
-- |
Non-GAAP Net Income |
$ 46,202 |
$ 38,086 |
$ 152,514 |
$ 103,648 |
|
|
|
|
|
GAAP Diluted EPS |
$ 0.48 |
$ 0.46 |
$ 1.82 |
$ 1.23 |
Non-GAAP Diluted EPS |
$ 0.60 |
$ 0.46 |
$ 1.95 |
$ 1.24 |
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
(Unaudited data in thousands) |
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
Mar. 31, 2014 |
Mar. 31, 2013 |
Mar. 31, 2014 |
Mar. 31, 2013 |
|
|
|
|
|
GAAP cash flow from
operations |
$ 11,249 |
$ 37,396 |
$ 149,280 |
$ 110,866 |
|
|
|
|
|
Capital expenditures |
(1,555) |
(1,574) |
(9,653) |
(8,582) |
|
|
|
|
|
Free cash flow after acquisition related
charges |
9,694 |
35,822 |
139,627 |
102,284 |
|
|
|
|
|
Acquisition - change in control payments |
5,695 |
-- |
5,695 |
-- |
Acquisition - accelerated equity
compensation |
6,929 |
-- |
6,929 |
-- |
|
|
|
|
|
Free cash flow before acquisition
related charges |
$ 22,318 |
$ 35,822 |
$ 152,251 |
$ 102,284 |
Reconciliation of GAAP to Non-GAAP Financial
Guidance
The company's future performance and financial results are
subject to risks and uncertainties, and actual results could differ
materially from guidance set forth below. Some of the factors that
could affect the Company's financial results are stated in the safe
harbor statement of this press release. More information on
potential factors that could affect the Company's financial results
are included from time to time in the Company's public report filed
with the SEC, including the Company's recent Form 10-K and Form
10-Q.
|
Fiscal Year
2014 |
Diluted net income per
share |
|
GAAP diluted net income per share |
$2.23 - $2.26 |
Acquisition - change of control payments |
0.04 |
Acquisition - accelerated share based
compensation |
0.06 |
Acquisition - amortization of intangible
assets |
0.04 |
Non-GAAP diluted net income per
share |
$2.37 - $2.40 |
Safe Harbor Statement
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements relating to the Company being well
positioned to grow its business in the future, deliver long-term
value for shareholders, and achieve its goal of building the
leading global molecular diagnostic company focused on providing
exceptional patient care across all major human diseases; the
Company's financial guidance under the caption "Increased Fiscal
Year 2014 Outlook;" and the Company's strategic directives under
the caption "About Myriad Genetics". These "forward-looking
statements" are management's present expectations of future events
and are subject to a number of risks and uncertainties that could
cause actual results to differ materially and adversely from those
described in the forward-looking statements. These risks include,
but are not limited to: the risk that our expectations regarding
our fiscal 2014 revenues and 2014 non-GAAP earnings per share may
be incorrect (including because one or more of our assumptions
underlying our revenue or expense expectations may not be
realized), the risk that sales and profit margins of our existing
molecular diagnostic tests and companion diagnostic services may
decline or will not continue to increase at historical rates; risks
related to changes in the governmental or private insurers
reimbursement levels for our tests; risks related to increased
competition and the development of new competing tests and
services; the risk that we may be unable to develop or achieve
commercial success for additional molecular diagnostic tests and
companion diagnostic services in a timely manner, or at all; the
risk that we may not successfully develop new markets for our
molecular diagnostic tests and companion diagnostic services,
including our ability to successfully generate revenue outside the
United States; the risk that licenses to the technology underlying
our molecular diagnostic tests and companion diagnostic services
tests and any future tests are terminated or cannot be maintained
on satisfactory terms; risks related to delays or other problems
with operating our laboratory testing facilities; risks related to
public concern over our genetic testing in general or our tests in
particular; risks related to regulatory requirements or enforcement
in the United States and foreign countries and changes in the
structure of the healthcare system or healthcare payment systems;
risks related to our ability to obtain new corporate collaborations
or licenses and acquire new technologies or businesses on
satisfactory terms, if at all; risks related to our ability to
successfully integrate and derive benefits from any technologies or
businesses that we license or acquire; the risk that we or our
licensors may be unable to protect or that third parties will
infringe the proprietary technologies underlying our tests; the
risk of patent-infringement claims or challenges to the validity of
our patents or other intellectual property; risks related to
changes in intellectual property laws covering our molecular
diagnostic tests and companion diagnostic services and patents or
enforcement in the United States and foreign countries; risks of
new, changing and competitive technologies and regulations in the
United States and internationally; and other factors discussed
under the heading "Risk Factors" contained in Item 1A of our most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission, as well as any updates to those risk factors
filed from time to time in our Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K. All information in this press release
is as of the date of the release, and Myriad undertakes no duty to
update this information unless required by law.
CONTACT: Media Contact: Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact: Scott Gleason
(801) 584-1143
sgleason@myriad.com
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